Travel cutbacks

HSBC's warning for business travellers

HSBC wants its employees to start cutting travel costs, Lee Whiteing, a travel manager for the banking giant, told attendees at the 2011 Business Travel Conference last week. Bloomberg reports:

"It's just going to be getting tougher out there," Whiteing said in a presentation. "We're going to continue to need to look to drive down the amount of travel. We're constantly looking at ways of economizing and doing things smarter."

[...]

HSBC can't simply achieve cost cuts by squeezing the travel companies with which it has corporate accounts, Whiteing said.

Mr Whiteing didn't provide a lot of information about how HSBC is going to cut travel costs—there wasn't much in the way of hard targets or cut-offs. That doesn't seem like the kind of policy that would actually result in lower expenses, but it's apparently worked before.

Mr Whiteing said last summer that HSBC didn't change its business-travel guidelines—the cut-off for business-class tickets, the quality of the hotels employees are allowed to stay at, etc...—at all when the financial crisis hit. Instead, travel managers simply "led by example" and cut the cost of an average trip to $396 in 2009, down from $518 a year earlier, according to Business Travel News. I suspect some of that cost-cutting was possible because business-travel demand was down. But since HSBC cut costs like this before, don't be surprised if they can do it again. (In any case, laying off 30,000 people, as the bank plans, will almost certainly cut costs more than any changes to business-travel policies could.)

The HSBC news does cut against a trend I noted two weeks ago in which corporate travel managers are becoming increasingly likely to approve business-class travel between Europe and North America. That makes me wonder if this story is more about cost problems at HSBC and broader worries about the European economy rather than problems for the travel industry. Of course, if Europe runs into worse economic trouble, the travel industry will suffer, and HSBC is Europe's biggest bank, so there's a lot of interconnection here.

"Mr Whiteing said last summer that HSBC didn't change its business-travel guidelines—the cut-off for business-class tickets, the quality of the hotels employees are allowed to stay at, etc...—at all when the financial crisis hit"

Why? It seems unusual that they didn't jump on travel costs. Most others did.